“You’re dead before you start”: Top UAE start-up lashes out at local business environment

The co-founder of one of Dubai’s most successful start-ups has hit out at the business landscape of the region, saying that new companies are not receiving enough support.

Joy Ajlouny, who runs delivery app Fetchr, said that visa restrictions, licence fees and red tape made it tough to get businesses off the ground.

“We feel frustrated as entrepreneurs because the ecosystem here is not conducive for helping start-ups,” Ajlouny told Arabian Business StartUp magazine.

“You need to buy a licence – that’s $25,000. You need to register with the government – that’s another $25,000. How do you prosper as start-ups?

The Fetchr app, which uses the GPS coordinates in consumer’s phone to send deliveries to specific locations, instead of fixed street addresses, launched last year.

In June, the firm raised $11 million in Series A funding from investors, including New Enterprise Associates, Delta Partners, Dhabi Holdings and 500 Startups.

However, Ajlouny said that, despite the funding success, local regulations had made it hard for the company to prosper.

“It’s hard enough for companies like IBM to prosper because of the extreme expense,” Ajlouny continued. “We’ve spent half our [original] funding on just licences. I mean, give us a break – we’re not IBM, we’re start-ups.

“If there’s one message I could get to Sheikh Mohammed, it would be something like ‘please, stop investing in steel – invest in talent and innovation’.

“A country is only as good as the humanity that it’s built on. Here you come and it feels like they can’t wait to kick you out.

“Every time we hire someone there’s a visa restriction and then they’ve got to leave the country, pay for a ticket for them to leave, then another medical examination. Think about all the expenses that rack up trying to run a company like a start-up. You’re dead before you start.”

In November last year, UAE Banks Federation chairman Abdul Aziz Al Ghurair said the country’s lenders were working together to try to stem the number of small business owners fleeing the country with unpaid debt, a trend that had reached around AED5 billion ($1.4 billion) in 2015.

Small and medium-sized enterprises (SMEs) have come under pressure in recent months amid a gradual drying up of liquidity in the banking system due to the weak oil price and slowing economic growth.

As a result, some business people have chosen to "skip" the country, leaving behind unpaid debt, a situation that bankers say has grown significantly from last year, although they did not provide precise figures. In a country where, under existing legislation, a bounced cheque risks landing the issuer in jail, many of those absconding fear the consequences if they stay.

Click here to read the full interview here with the founders of Fetchr

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Posted by: Scott Wolf @ Grace Century FZ LLC

Every Start-up has its own challenges. For the most part, I find the environment very supportive here in the U.A.E., with the exception of the interaction with banks. The fact that firms have fled and left unpaid debts has put excessive scrutiny on the ones that are here. We have been in business for more than five years and to get a Business credit card demands a mountain to move. But I have a news flash for you...its like that virtually everywhere in the world after 2008!

Posted by: Mark Williams

let me add few more !


Higher rents, higher wages for sales staff, higher trade license fees, the famous knowledge fees, daily fines by DM, Wasl etc, penalties, water, electric bills, salik, company car vehicle parking, many more to list

With no revenue coming in from sales figures, most companies are closing

let me also add, the mental stress businessmen we go through, when do I start saving?
Whatever that comes in as earning is going towards expenses

Posted by: khalid

true.

Posted by: Jacob Jose

Allow start ups with less fees and restrictions.. introduce tax once they succeed..introduce corporate taxes and reduce start up costs..That's the solution.

Posted by: beenaroundtheblock

Why is it that when talking about Dubai?s skyscrapers and Metro, comparisons are often made to New York, London or Tokyo. But as soon as Dubai?s negative aspects (such as red tape) are discussed, we tend to compare Dubai to ?other developing countries? where things are worse, to convince ourselves that everything?s great and couldn't be better?

Let's not be hypocritical for the sake of convenience.

Posted by: khalid

she is mostly right in her comments.
Fees, red tapes and hidden unknown restrictions.
(even with a good business plan)
but still much better than majority of emerging countries.


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